According to the Federal Trade Commission, around 25% of people have errors on their report that could affect their credit score. There’s a one in four chance that errors on your report are dragging your score down unfairly—which can end up costing you thousands of dollars. Luckily, you have the right to review your credit reports and challenge inaccurate items. Here’s how to get something off your credit report.
How to Challenge an Inaccurate Item on Your Credit Report
Your right to a free and accurate credit report is protected by the Fair Credit Reporting Act. Under the Act, if you challenge an item on your credit report and the creditor or credit reporting agency can’t verify the item’s accuracy, the act requires the unverified item be confirmed or removed from your credit report.
The Act gives bureaus and data furnishers 30 days to investigate and inform the consumer of their findings. That time can extend to 45 days under certain circumstances. The actual timeframe depends on many factors, including postal mail timing.
It’s not always as simple as it sounds, though. Check out the tips and information below to better understand how errors get on your credit report and what to do about them.
How Credit Report Errors Occur
Credit report errors can occur for a number of reasons. Here are some common ones:
- Mixed files. If someone with the same name or a similar name applies for credit, a piece of their file can become mixed with your file. A consumer with a common name such as “John A. Smith,” for example, might see his file mixed with a John B. Smith or a John A. Smith, Jr.
- Identity theft. If someone has stolen your Social Security number, they can open a new account in your name. This information appears on your credit report and can be particularly difficult to remove.
- Furnisher errors. Furnishers are banks, debt collectors, and others that report the information that shows up on your credit report. A clerical error or data issue with the furnisher can mean an error getting passed on to your credit report.
- Re-aging of old debts. Certain debts are supposed to age off your credit report within a certain amount of time. Re-aging can occur when a debt is sold to a third-party collector and the start date on the debt’s clock is muddied and appears to be a new debt. It may even appear twice on the report from the original debtor and the debt collector. This can cause your credit to take a hit for much longer than it should.
How Fast Can You Clean Up Your Credit Report?
The length of time it takes to clean up your credit report depends on the number and type of issues you have. In many cases, you may be able to notice improvements to your credit score in just a few months. However, it could take several years to fully restore your credit.
Bad credit issues, such as late or missed payments and defaults, can remain on your credit for up to 7 years in most cases. However, bankruptcies can remain on your account for up to 10 years. Ultimately, these negative items can affect your credit score. Fortunately, most credit scoring models place a higher weight on current debt. So, as you continue to improve your credit habits, your score can continue to rise.
Removing errors from your credit report typically takes less time. The law requires credit reporting agencies to investigate all consumer disputes. They have 30 days to complete this investigation and another five days to provide you with a written explanation of their findings. If the credit card reporting agency finds in your favor, it can take an additional 30 days to fully remove the debt from your report.
How to clean up your credit report
1. Review Your Credit Report for Errors
The first step is to review your credit reports for errors. Errors on credit reports occur more frequently than you might think, so it’s important to examine your credit report for errors. You can obtain one free credit report a year from each of the three top credit reporting agencies—Experian, Equifax, and TransUnion.
All you need to do is go to AnnualCreditReport.com to make this request. Or, you can submit a request directly to each credit reporting agency.
Once you receive your credit reports, be sure to examine them carefully for any errors, including personal and financial information. Make a list of any errors you detect and gather as much information as possible to prove this error.
2. Create a List of Errors
You must challenge each item separately with the credit bureau that issued the report. You can’t make a blanket challenge for everything wrong on one report. Say, for example, you have two collection accounts you want to challenge on the same credit report. You have to file two separate challenges.
If the items needing verification are for the same account—two late payments on your mortgage, for example—you only need to file one challenge to request verification of the late payments. You do need to specify that you want both of the late payments removed, however.
When you finish reviewing your credit reports, take stock of all the items you want to challenge. This can help you decide if you want to handle credit repair yourself or work with a service.
3. Gather Supporting Documentation
Once you know what you need to challenge, you’ll need to gather documentation to support your claim that the items are inaccurate. The more evidence you have, the stronger your case will be.
In some instances, it may be hard to determine what kinds of evidence are needed. For example, an identity theft victim may not know what they need to provide to show they didn’t open an account. If you have reason to believe you were the victim of identity theft—warning signs include mysterious addresses and accounts you never signed up for.
4. Write a Dispute Letter
The next step is to submit a dispute letter to each credit reporting agency listing an error. When writing this dispute letter, be sure to be as specific as possible.
Include your contact information along with all relevant information about the dispute, such as a description of the item in dispute, why you believe it’s incorrect, and all backup documentation you’re providing. Also, clearly state that you want this inaccurate information removed from your credit report as quickly as possible.
Before submitting your request, be sure to make copies of all the documentation you’re sending along. Don’t send your original documents. Only submit copies, because you may have a hard time getting these documents back.
5. Watch for Your Claim Results
Credit reporting agencies have up to 30 days from the date they receive your dispute letter to complete a full investigation. If they find your claim to be frivolous, it could take less time to receive a response. No matter what their decision is, credit reporting agencies have five days from the completion of the investigation to communicate it. You should receive this decision in writing.
If the credit reporting agency determines that your issue isn’t an error, no other action will take place. However, you do have the right to file another complaint. If they agree the issue was an error, they must remove or correct this information from your report.
6. Work with a Credit Repair Agency
If the credit reporting agencies decline your dispute or you’re having trouble knowing how to dispute credit report errors yourself, working with a credit repair agency might be the way to go.
Credit repair services, such as CreditRepair.com, are staffed by people with experience helping clients challenge incorrect data from their credit reports. They can handle the entire process on your behalf.
7. Continue Monitoring Your Credit
Cleaning your credit up once doesn’t mean it stays free of errors forever. Make sure you have a way to follow up with your credit report to make sure the inaccurate negative information was properly removed or stays corrected. Then, keep an eye on your credit so you know if future errors impact it.
Accurate Negative Items on Your Credit Report
Removing accurate negative items from your credit report can be difficult. In fact, if the information is correct, credit reporting agencies won’t remove this information for as long as 7 years. Instead of working with the credit bureaus, you need to discuss removing these negative items with the original creditor.
Send a Pay for Delete Letter
Some creditors may be willing to enter into a pay to delete settlement with you. With this process, you agree to pay the creditor the full amount or an agreed-upon amount and the creditor agrees to remove the reported item or change the status of the account on your credit report to something more favorable. Be sure to get this agreement in writing.
You’ll want to consider this option carefully, however. Many experts advise against using pay-for-delete practices as creditors are required to report accurate and complete information. Even if a debt shows as paid, missed or late payments can still show up on your credit report for 7 years regardless.
Make a Goodwill Deletion Request
If you’ve already paid the debt in full but it remains on your credit report, you can request a goodwill deletion. To make this type of request, you need to submit a letter to the creditor explaining why you were late on your account. For example, perhaps you lost your job and fell behind on your bills.
If you’ve been a good customer otherwise, the creditor may be willing to delete this information from your credit history. Remember that creditors are under no obligation to agree, or even respond, to this request. However, it never hurts to ask.
Wait Out the Statute of Limitations
If these options don’t work, you may need to wait out the credit reporting limits. For most types of credit issues, the limit for keeping this information on your credit report is 7 years. Bankruptcies can remain for up to 10 years. Medical debt is the one exception to this rule. Once you pay the medical debt in full, Equifax, Experian, and TransUnion remove it from your credit report.
What Not to Do When Rebuilding Your Credit
When rebuilding your credit, there are a few things you shouldn’t do. First, don’t file for bankruptcy unless absolutely necessary. This credit issue remains on your credit for up to 10 years and could impact your credit score significantly. You also don’t want to close an account unless you’re forced to do so by the creditor. Remaining a customer may give you leverage to negotiate a deal.
Additionally, you should refrain from paying off an unpaid debt until you talk directly with the original creditor. You may be able to negotiate a lower payment agreement.
What Can Affect Your Credit Report Negatively?
There are several things that can negatively affect your credit score, including:
What Impact Do Errors Have on Your Credit Report?
Depending on the error, any mistake on your credit report can impact your credit score. In fact, it could determine your ability to secure a loan approval, obtain a credit card, get a job, or rent an apartment. These factors are why it’s so important to regularly check your credit report for errors.
What Can’t Be Disputed on Your Credit Report?
Technically, you can dispute any information on your credit report. However, credit reporting agencies will only remove information that’s incorrect.
For example, the balance due may be wrong, the number of missed payments may be incorrect, or the entire debt may not belong to you. In all these cases, you should file a dispute. If the information is correct, there’s no point in filing a dispute, because the credit reporting agencies won’t agree to any changes.
What Happens When You Dispute Inaccurate Information?
Once you dispute inaccurate information on your credit report, the agency must start a full and comprehensive investigation. It has 30 days to complete this investigation and another five days to provide you with a response in writing.
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